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IBM Wins Avon HRO Contract

November 16, 2006
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IBM has won a global HR outsourcing deal with Avon Products, a deal experts believe demonstrates that HRO providers with a background in outsourcing will dominate the market.

Under the deal, IBM will oversee a number of Avon’s HR processes, including compensation, payroll, benefits and performance management for the cosmetic company’s 45,000 employees. The technology company also will maintain HR call center support for Avon’s employees in a number of countries.

"We selected IBM because of their experience in providing world-class HR processes," says Avon spokeswoman Sharon Samuel. Avon estimates about 100 employees will be affected by the deal, she says.

Implementation will begin in December, and Avon expects the process to be rolled out during the next two years, Samuel says, She declined to comment on the deal’s length or the contract’s value.

The Avon deal is one of a number of HRO wins that analysts expect to see from IBM in the next few months.

"IBM is clearly emerging as the main global competitor to Accenture HR Services," says Phil Fersht, an analyst at Everest Group, a Dallas-based sourcing advisor.

This is just one more HRO deal that proves how traditional outsourcers are poised to win this market, says Michel Janssen, managing director at Atlanta-based Hackett Group.

"The debate has been is it going to be the outsourcing domain or the HR domain that wins this market," he says. "I bet you will start seeing the market move more to the outsourcing domain because these companies understand the business model."

IBM’s success in the HRO space will be good for the whole industry, particularly as companies like Hewitt Associates struggle to get back in the game, analysts say.

"The market needs IBM to be successful to help HRO through some challenging times," Fersht says.

Jessica Marquez

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